Know the importance of Form 16. Understand Form 16 before filing Income Tax return. Check procedure for Income tax return filing by the employee using Form 16. For more information regarding Form 16, read the following content.
What is Form 16?
Form 16 is an Income Tax certificate issued to salaried individuals in India by their respective companies (employers). The document carries all necessary details that assist the employee in filing Income tax returns. Form 16 is issued to an employee by their employer and is used as a source of proof of filing Income Tax returns of the employee. The Form consists various details of an employee such as salary components, TDS (Tax Deducted at source) by the company or the employer, and tax paid by the Employer to the Income Tax Dept. Every company (employer) should provide their employees with the Form 16 who fall under the tax brackets set up by the Finance Ministry of the Govt of India. If the employee doesn’t fall under the tax brackets set, then will not need to pay taxes neither will they need to have TDS.
The components mentioned in Form 16
- The details of the employee, such as name, PAN details (Permanent Account Number), etc.
- The employer details, like name, PAN, TAN (Tax deduction and collection Account Number), etc.
- An acknowledgment number of the taxes paid by the employer.
- Details of the salary, Gross salary, net salary, deductions, perks, etc.
- Total income and Tax deductions.
- Surcharge and Education Cess details.
- Taxes deducted as per Section 191A.
- Declaration of tax payments from the employer.
- Refunds in any to the employee, or balance of taxes payable by the employee.
- Receipt of the TDS paid.
- All details of the tax payment, like Challan number, cheque number, Demand Draft number, etc.
Must Read: TDS on Salary
Significance of Form 16
The importance of Form 16 cannot be overlooked by the employee as well as the employer. Let’s take a look at some salient features of Income Tax Form -16.
- Form 16 present as source document during filing of Tax Return as it contains the details about income, deductions, tax calculated and TDS as per the Income Tax Rules.
- It provides as in the primary document for claiming the credit of Tax deducted by the company or organization, and employee might be required to produce to Income Tax Authorities if he doesn’t get the credit of TDS properly.
- Form 16 is required while processing the visa.
- For acquiring ITCC (Income Tax Clearance Certificate) from IT Department Form 16 is mandatory.
- Form 16 can also be used for the home loan for the employee. In some authorized banks, the employee must submit Form 16 as a proof of Income.
Parts of Form 16
One of the significant income tax forms is Form 16. It contains most of the information that employee need to prepare the income tax return in India. Form 16 has two parts Part A and Part B.
Form 16 Part A
- Name and address of the employer.
- TAN and PAN details of the organization.
- Employee PAN details.
- Assessment Year.
- Summary of Tax deposited and deducted quarterly, which is certified by the employer.
- Period of employment with the employer.
- Part A also has a unique TDS Certificate Number.
Form 16 Part B
- The detailed breakup of salary paid.
- Deductions allowed under the Income Tax Act as per Chapter VIA.
- Relief as per Section 89.
- If the employee has held more than one job during the year, then he will have to submit more than one Form 16.
- Part B of form is prepared by the employer manually and issued along with Part A.
Download Form 16
|A Certificate under [Section 203] of the Income Tax Act,1961 for TDS from income chargeable under the head “Salaries”.||Form 16|
Efiling Income Tax Return – Form16
Let’s have a look at how to fill Form 16.
Under Part A
The employer must fill the following details listed below.
- Name & address of the Employer. Will be the employer details.
- Name and designation of the Employee.
- PAN of the deductor (Employer).
- TAN of the Employer.
- PAN details of the employee.
- The Income Tax Commissioner’s office details like CIT (TDS).
- Assessment year and period.
- Summary of the quarters mentioned the organization/company.
Under Part B
- Gross salary: Its employee’s salary without any deductions plus any prerequisites received.
- The allowance: The provisions offered by the company to the employee like travel allowance(TA), House Rent Allowance (HRA), etc.
- Income: The total income chargeable under salaries.
- Gross total income: The amount on which employee taxes will be calculated.
Must Read: Income Tax Efiling